Under the original table the best performance would be shown by the manager in New York, then the one in Chicago, Little Rock and he last place would be taken by the manager running the office in Paris.
Yet, if we ignore non-traceable costs, the manager in Little Rock would be the last in the rank. Thus, from the first sight it is reasonable to say that the least efficient manager is the one of Little Rock, cause his office gives the least amount of money (if we don’t consider non-traceable costs).
Yet, in order to be more accurate, it is necessary to estimate not simply the absolute indicators of revenue, but efficiency, i.e. relative indicators. The best way to do so is to determine the percentage of traceable costs to the overall billings.
Thus, we can see that the least efficient work is shown by Paris office, cause its overall traceable costs are too high to enable the office to get income even despite the fact that its overall billings are substantial. The most efficient work is shown by small experimental Little Rock office with the lowest traceable cost percentage of 0,5 or 50%.
Which method provides for more goal congruence? Why?
Considering the traceable costs in evaluating office’s performance has one shortcoming: the more money office generates in revenue, the bigger absolute number of non-traceable costs attributed. This paradox can somehow underestimate the offices performance. Thus, it is oftentimes better to evaluate managers who run the offices not considering those costs.
The Essay on The Roles And Responsibilities Of A Project Manager
Today’s businesses have found that project managers have become more popular and valuable to the organizations industry. A project manager is a leader who specializes project management. They have a responsibility in completing simple tasks up to the most difficult projects. A project manager can arrange the project into three simple stages; planning, organizing, and controlling that will assist ...
Yet, to be absolutely accurate in evaluations, it is important to see the relative figure of traceable costs compared to revenue. In our case, it is obvious that though Paris office generated more money in revenue than the one in Chicago its net income is low (in fact, it is absent at all).
The reason of such poor performance is not so much high figure of non-traceable costs, as extremely high figure of traceable costs. It tells about the absence of cost control and thus about poor managerial performance.
At the same time small office in Little Rock generated 8 times les money than the one in Paris. However, due to the lowest figure of traceable costs compared to revenue, it ends up on the third place after Chicago office leaving behind big office in Paris. Thus, manager in Little Rock deserves to be rewarded.
In such a way, it is crucial to say that big city doesn’t necessarily ensure greater profits. Everything depends on managerial effectiveness. Constant cost monitoring may ensure good performance even at small location, such as Little Rock.
References
1. Harrison Jeffrey S. and John Caron St., Strategic management of organizations and stakeholders: concepts and cases, 2nd ed., South-Western College Publishing: Cincinatti, Ohio, 1994
